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How to file bankruptcy. Chapter 7, 11 and Chapter 13 bankruptcy. Free bankruptcy forms. Bankruptcy filing is a Federal court proceeding which can affect legal rights to keep or use property. Bankruptcy court cases may be impossible to stop once started!
US courts free bankruptcy forms to file chapter 7, chapter 11 and chapter 13 bankruptcy. Learn how to file bankruptcy.
How to file bankruptcy - A straightforward bankruptcy proceeding generally takes 4-6 months. In Chapter 7 bankruptcy, nonexempt assets are sold to pay creditors while most debts are discharged. Chapter 7 bankruptcy filing is limited to once every six years. Notice of the filing remains on a credit report for 10 years minimum. Although debts may be discharged, loan cosigners remain responsible even after the primary borrower's bankruptcy filing. Many assets are sold by an appointed trustee, who makes partial payments to creditors. The filer has the right to retain an interest in certain partially exempt assets, such as a residence, car, clothing, household appliances and furnishings, life insurance, pensions and trade tools. You may usually choose either the exemptions provided for in the Bankruptcy Code or those allowed under state law.
In Chapter 13 or Chapter 11 bankruptcy, a reorganization plan is prepared to pay off creditors. Once filing a personal bankruptcy petition, an automatic stay prevents creditors from starting or continuing most legal proceedings. Chapter 11 bankruptcy is generally used to reorganize a business, although individuals are eligible. This type of bankruptcy allows a business to continue operating while repaying creditors through a court approved plan. If you have a regular income, Chapter 13 bankruptcy provides a method for repaying debt over time, according to a bankruptcy court approved plan. The period of time allowed ranges from 3-5 years. Only individuals with unsecured debts below $250,000 and secured debts below $750,000 are eligible. To file Chapter 13, file the appropriate schedules and petitions with the bankruptcy court and pay the filing fee. Also file a proposed plan of repayment with your original petition or within 15 days. A trustee will be appointed to supervise your performance, to make regular payments to creditors and provide the court and other parties with your financial information.
Creditors retain the right to any collateral pledged to secure a loan. The first step in bankruptcy is to file a petition and schedules at the clerks office of the federal bankruptcy court. Your petition must include lists of all creditors, your sources of income, a list of all real and personal property, and a detailed list of living expenses. Necessary documents include: Deeds, mortgages, contracts on your home and mortgage statements, papers relating to past bankruptcies, copies of tax returns for the past two years, all legal papers, summonses, complaints and notices of attachment, execution or garnishment, credit card bills, medical bills and any other documents regarding outstanding debt, plus statements and passbooks for savings or checking accounts for the past year and student loan papers. Free bankruptcy forms to file bankruptcy. The fee is about $175 payable upon petition filing. Under certain circumstances, the court may allow fee payment in installments.
Certain debts cannot be discharged through bankruptcy, including most taxes, alimony and child support, student loans and some property settlements. Other non dischargeable debts result from fraud, willful or malicious injury, certain fines or penalties, and claims incurred from driving under the influence of alcohol or drugs.
A bankruptcy filing stays on a credit record for 7-10 years, but need not be a permanent handicap. Laws forbid discrimination against persons who have declared bankruptcy. You cannot be denied a job, be denied or evicted from public housing or be denied a drivers license because of bankruptcy.
Need more information? Read our financial and credit articles related to bankruptcy, and join our online financial newsletter. Recovering from Bankruptcy: Published 10/28/2009
It is possible to get credit after bankruptcy even though it hits your credit report and credit scores hard. Bankruptcy can stay on credit reports up to ten years. It could take years to get qualified for loans with good rates and terms but rebuilding credit is the most important thing to do. The only way to rebuild credit is to get credit and demonstrate that you can be responsible.
Clean up your credit report by making sure that obligations that were eliminated as part of the bankruptcy are not shown as open and overdue. If this happens, contact the credit bureaus and ask that those accounts are reported as part of the bankruptcy. Correct any other information that is not correct as soon as possible.
To rebuild credit, apply for secured cards which require a deposit, revolving credit cards, auto loans, student loans, and later mortgage loans. When searching for secured cards, look for a no application fee, a reasonable annual fee card that reports to the three major credit bureaus (Equifax, Experian and TransUnion), and converts to an unsecured card after some months of on-time payments. Don't use over 30% of your total available credit limit as this can harm credit scores. A couple of years after your bankruptcy has been closed, you may be able to get a FHA loan with good terms if you have maintained good credit habits.
Open a checking account and don't bounce checks. Establish contact with bank managers so in the future you may be able to get a loan. Pay rent on time and ask the manager if they will report good payment habits to a major credit bureau.
Learn from your mistakes and monitor finances so bankruptcy is not pursued a second time. Get on a budget, do not overspend, live within your means. Don't get a big mortgage and have payments that are too high for your budget. Many consumers file bankruptcy because of having a large mortgage note that can not be paid. Start a savings account to prepare for a possible job loss, medical bills, or other emergencies. If you have a student loan, which typically are not discharged in bankruptcy, make payments on time, pay more than the minimum, as paying down the debt is one way to rebuild credit scores.
Auto loans are another way you can start to rebuild your credit, even though you may have extremely high interest rates after bankruptcy. Try to make a big down payment and choose a loan that doesn't have a prepayment penalty. You could try to refinance the car to a lower interest rate later as your credit gets better. Chapter 13 Bankruptcy
Chapter 13 filing may be a method of bankruptcy for consumers who don't want to lose their assets and they want to retire as many debts as possible. This type of bankruptcy can have less pressure. Some debt balances can be partially discharged and the person agrees to a monthly payment to a trustee to be distributed to remaining creditors. Any bankruptcy is a mark against your credit record, yet Chapter 13 filings are often seen as a bit less serious than Chapter 7 bankruptcy. You would need to see specific bankruptcy information regarding your area of residence.
Chapter 13 bankruptcy can allow you to keep property like a mortgage or auto if you have income and not much debt. For Chapter 13 bankruptcy, the court approves a repayment plan that allows you to pay off a default during a period of three to five years, rather than loosing your property. It is often best if facing bankruptcy to contact a trained financial person to give advice and help with bankruptcy issues. Chapter 7 Bankruptcy
It can be possible to file bankruptcy and retain personal belongings like a home, auto, and household goods if the state bankruptcy exemptions can be used to protect personal items. There is a risk of losing property when bankruptcy is not filed and creditors sue you and attach to your bank accounts, garnish your wages, and seize your property. This can make life difficult for just having basic necessities in life.
Once bankruptcy is filed, your creditors can be referred to a bankruptcy attorney or legal helper. Creditors usually can't pursue a non-filing spouse, unless they are legally a co-debtor on the debts. Also, bankruptcy should not be reflected on the non-filing spouse's credit report. The law does vary from state to state so ask a bankruptcy attorney about how it will affect your spouse. Creditors, the bankruptcy court, and the IRS will receive a notice of the bankruptcy and an employer will not be notified unless they are a creditor. Bankruptcy is public record and anyone who wants to find out that you filed bankruptcy can get that information.
Sometimes there is concern about renting a place to live when bankruptcy has been filed. There could be some difficulties when leasing companies have strict policies regarding applicants with blemished credit. You could appear to be more of a risk than other applicants. You may want to consider offering an extra month security deposit to help overcome any concerns.
Bankruptcy will stop a lawsuit and can prevent creditors from placing a lien on a home or garnishing wages. When a home is being foreclosed or an auto is about to be repossessed, often bankruptcy may prevent the foreclosure action or repossession from proceeding. One option could be to consolidate the mortgage or automobile balance and make payments on those debts over time through some type of payment plan and Chapter 13 bankruptcy could help save a house and auto.
Some consumers file bankruptcy when they are have thousands of credit cards debts or high medical bills with no hope of ever paying the debts and they file Chapter 7 bankruptcy to get a fresh start in life. There are events that can occur that cause consumers to have to file bankruptcy. It could be a sudden loss in income, a family medical catastrophe, or injury. Usually it is hard to determine if bankruptcy is the right decision and it should be carefully considered.
When considering to file for bankruptcy, get advice from someone who is familiar and experienced with bankruptcy laws. Especially if you own a home, auto, or other assets that you may want to try to protect. Get information about fees and speak with someone who can answer your questions. Bankruptcy may legally be reported to your credit report for up to 10 years, yet you can begin to re-establish credit immediately. Credit is your ability to borrow money and lenders consider many factors when deciding to loan you money. One of these is debt-to-income ratio. Filing bankruptcy eliminates some of your debts, thus reducing some of your debt-to-income ratio. Lenders need to make money and they can by charging interest fees. There are options for getting credit even if bankruptcy is on credit reports. Bankruptcy Legal
Chapter 7 is known as liquidation or straight bankruptcy. This can be the simplest and quickest option for some individuals, corporations, or partnerships. A trustee, which is appointed by the court, collects and sells your nonexempt property. The money from the sale is used to pay your creditors and you can keep any exempt property. You would need to check with your state, but exempt property could be such things as real estate, professional tools, books, unmatured life insurance, prescription health aide, veteran's benefits, disability or employment benefits, and proceeds from a judgment. There are state and federal exempt property lists. Most chapter 7 cases are no-asset cases or rather that there is not any nonexempt property for the trustee to sell. When you file for bankruptcy, you state whether your case is "asset" or "no-asset."
Bankruptcy starts with the filing of an official petition and statement of financial affairs in bankruptcy court. You must provide a list of all your creditors and the amount of their claim, your properties, your income and details of your living expenses. Once you file for bankruptcy, creditors can't try to collect on your debts and this gives you a break from being sued. Creditors must prove to the bankruptcy judge there is cause for a collection action. Chapter 7 will not stop repossession or a foreclosure. Only by filing Chapter 13 can you delay a foreclosure. It is best to take some time when deciding whether to file and which chapter to file. You can't file again for two years and it is important to choose the right way to file from the beginning. Bankruptcy Legal
For consumers considering bankruptcy, it may help to visit a bankruptcy lawyer, if the initial consultation is free. A lawyer can advise you of your rights and give valuable information about the types of bankruptcy and how it works. This may be a worth while visit if there is a lot of financial stress or there is the fear of losing assets. A bankruptcy lawyer or even a credit counselor should be considered when debts are more than you can cope with before making any final decisions or bad choices. Seek the help and support of family members when you need some input as to what option might be best for you to get out of debts.
Bankruptcy does have an impact on personal credit for ten years, but when debts can't be repaid due to financial, medical, or other hardships it may be the only option to have a new start. There are over 9 federal judicial districts that handles bankruptcy matters and bankruptcy cases are filed in the bankruptcy court as they can't be filed in state court. Bankruptcy is a choice for some consumers as a way to liquidate their assets to pay debts or by creating a repayment plan. Most cases are filed under the three main chapters of the Bankruptcy Code, which are Chapter 7, Chapter 11, and Chapter 13.
In 2005, the Bankruptcy Code was amended and requires most individual debtors complete a special briefing from an approved credit counseling agency before filing a bankruptcy case. The United States trustee and the bankruptcy administrators maintain a list of approved providers that offer the special pre-bankruptcy briefing. Bankruptcy is not a quick method to get relief from debts and could take months before it is over after filing. Unfortunately, bankruptcy cases filed in federal courts for 2009 had increased from 2008. Consider seeking information about debt consolidation as an option for debt relief. Bankruptcy Legal
Before rushing out to file Chapter 7 Bankruptcy, make sure you can qualify for it first. Only bankruptcy filers with mostly consumer debts and not business debts need to see if they qualify to wipe out all debts. Using Chapter 7 does not mean that you will be penniless, you could earn some monthly income and still qualify if there are a lot of expenses. One expense could be a high mortgage payment.
Chapter 7 bankruptcy is for those people who really can't pay their debts. It is determined by looking at an average income over six months and then looking at certain monthly expenses. The expenses are then taken from the current monthly income. This gives a disposable income and the higher the disposable income is, the more likely you won't qualify for Chapter 7 bankruptcy.
You would need to know if your current monthly income is less than the median income for a household of your size, in your state. Then you would need to know if you have enough disposable income to repay some debts. Median income levels vary by state and household size, and each county. Each usually has different allowed amounts for expenses like the basic necessities, housing, and transportation. There are some available online calculators to help you do the math. It can also help to seek the advice of a bankruptcy lawyer to determine if you qualify to file bankruptcy and which type to file. Consider trying to use other debt relief services instead of bankruptcy as an option. Bankruptcy Legal
Bankruptcy law can allow a plan for a debtor, who is unable to pay creditors, to try to resolve the debts by dividing assets among the creditors. The division takes into account the interests of all creditors to have some equality. There are some bankruptcy proceedings that can allow a debtor to stay in business and use revenue to resolve the debts. A purpose of bankruptcy law is to let certain debtors to be discharged of the financial obligations after the assets are distributed, even if debts are not paid in full. Bankruptcy law is a federal statutory law contained the United States Code and Congress passed the Bankruptcy Code to establish some uniform laws throughout the United States. States may not regulate bankruptcy, though they can pass laws that govern some aspects of the debtor-creditor relationship.
Bankruptcy proceedings are supervised by United States Bankruptcy Courts, and the courts are a part of the District Courts of the United States. United States Trustees were established by Congress to take care of supervisory and administrative duties of bankruptcy proceedings. Proceedings in bankruptcy courts follow the Bankruptcy Rules which were promulgated by the Supreme Court. Bankruptcy proceedings filed under Chapter 7, called liquidation, is the most common type of bankruptcy. An appointed trustee collects the non-exempt property of the debtor, sells it and distributes the proceeds to the creditors. Bankruptcy proceedings under Chapters 11, 12, and 13 involve the rehabilitation of the debtor to allow the use of future earnings to pay off creditors. Chapter 7, 12, 13, and some 11 proceedings is when a trustee is appointed to supervise the assets of the debtor.
A bankruptcy proceeding can either be entered into by a debtor or initiated by creditors. After bankruptcy proceeding are filed, creditors may not try to collect their debts outside of the proceeding. The debtor is not allowed to transfer property that has been declared part of the estate subject to proceedings. Even certain pre-proceeding transfers of property, secured interests, and liens may be delayed or invalidated as the Bankruptcy Code establishes the priority of creditors' interests.
A recent decision, in 2005, by the Supreme Court, shifted the power towards the debtor. The Court held that assets in Individual Retirement Accounts (IRA's) are protected and exempt from withdrawal from the bankruptcy estate. This decision provided millions of Americans close to retirement with protection of their earnings. The Bankruptcy Prevention and Consumer Protection Act, brought about reforms in bankruptcy law, concerning dismissal or conversion of Chapter 7 liquidations to Chapter 11 or 13 proceedings. The law expands the responsibilities of the United States Trustees Program to provide credit counseling to individuals before they file for bankruptcy and even provide financial education to individuals before they are discharged from debt. It can be a good idea if bankruptcy is being considered, to be sure to first seek the help and advice of a bankruptcy lawyer or credit counseling agency to determine all options. |
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